The coax digital (and the toslink, which is also digital) is definitely the way to go for the DVD player, and will probably sound better than analog cables for the CD player. The only way to use the 1050's onboard digital decoding (Dolby Digital and DTS) is to connect a DVD player with a digical cable (the optical/toslink or the coax, they both do the same thing). For stereo stuff (the CD player, the DVD until you get a center and surrounds), the 1050's onboard DACs (digital-to-analog converters) will probably sound better than the DACs in your CD player or DVD player. When the digital cable is used, the DAC in the CD or DVD is not used -- the digital data from the disc is passed on to the 1050 to be manipulated and converted to analog.

Keep on mind that you only have one coax digital input on the 1050, so if the CD player has a coax digital output you will have to use the optical (toslink) output on your DVD player. It's not a problem (I've used that arrangement about half of the time that I've had my 1050), just something to remember when you go to get cables.

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